The highest court in Massachusetts has ruled that the Massachusetts overtime and Sunday pay laws apply to retail salespeople who work on a commission basis, meaning those employees are entitled to “separate and additional” pay equal to at least 1.5 times the minimum wage when they work more than 40 hours in a week, on Sundays, or on certain specific legal holidays.
In that case, Sullivan v. Sleepy’s, LLC, the employer paid its sales employees on a commission basis with a $125 daily recoverable draw. In other words, the employees would receive the greater of (1) the $125 day draw or (2) any commissions they earned in excess of $125. Even though this system ensured that the employees always received total pay equal to 1.5 time the minimum wage for overtime or Sunday work, the Massachusetts Supreme Judicial Court held it violated the state’s wage laws because it “function[ed] as a flat rate payment that does not change based on whether the employee works overtime.”
The Court explained the purpose of the overtime and Sunday pay laws was to “to reduce the number of hours of work, encourage the employment of more persons, and compensate employees for the burden of a long workweek.” The employer’s commission-based payment scheme violated all of those principles because it merely resulted in employees receiving the same amount of compensation regardless of how many hours they worked, which meant the employer lacked the incentive to hire additional workers and did not actually result in the employees receiving more pay for working longer work weeks.